Wilson v. Maryland Life Insurance

Robinson, J., delivered the opinion of the Court. After devising one-half of her property to her husband absolutely, and the other half in trust for him for life, with remainder to her children, the testatrix directed: “My said trustee shall have power to invest and change the investment of said moiety, and for that purpose to sell, convey and dispose thereof, or any part thereof, as often as he may think proper,” &c. After the death of the testatrix, part of the property was under a decree for partition allotted to the husband absolutely, and part of it was allotted to be held subject to the trust declared in the will. On the 22d September, 1810, the husband, who was also trustee under the will, in his own right, and purporting to act as trustee, executed to the appellee a mortgage of the property, thus allotted to him in trust to secure the payment of ten thousand dollars.

The money thus borrowed, the proof shows was expended by the husband for his own personal use, and none of it applied for the benefit of the cestuis que trust. The question is, whether the mortgage is valid, so far as it affects the rights and interests of the cestuis que trust Í And this depends upon the construction of the power conferred on the trustee by the will. A power of sale, like all other , powers, can be exercised only in the mode and upon the terms and conditions prescribed by the instrument creating it. Did the testatrix then, in authorizing the trustee to sell and dispose of the property devised to him in trust for the purpose of reinvestment, and for this purpose only, mean that he should mortgage it to secure the payment of borrowed money ? or did she mean an out and out 'sale or conversion of the property, and a reinvestment of the proceeds arising from the sale, for the benefit of all parties interested under the will?

Now it seems to us in the face of Latrobe vs. Tyson, 42 Md., 325 , the meaning of the words “sell and dispose,” as used in this ¹⁵³ connection, is hardly an open question. In that case, as in this, the trustee was authorized to “ sell and dispose of the property,” and in that case as in this, the trustee mortgaged the property to secure the payment of borrowed money. After full argument and full consideration, for all of us felt the law pinched hardly in that case, we were obliged to hold both on principle and on authority, that the power meant an “out and out sale,” or “conversion” of the property; and that the trustee was not authorized to pledge it by way of mortgage. If such then be the meaning of the words “sell and dispose,” as denoting the extent of the power to he exercised by a trustee, is there anything on the face of this will to show that they were used by the testatrix in any any other or wider sense ?

We think not. On the contrary, looking to the nature and objects of the trust, and the character of the property, it is plain she never meant to authorize the trustee to mortgage it for borrowed money. Already had she given him one-half of her entire property, and the other half too, she had devised in trust for him for life, with remainder to her children. The property was an outlying tract, near the city limits, yielding but a small yearly income, and it might be to the interest of all parties concerned, that it should he sold in whole or in part, and the proceeds of the sale reinvested.

With that view, for the purpose of changing the investment, the testatrix authorizes the trustee to sell and dispose of the property; and to say the trustee may do something ■else, that he may borrow money and mortgage the property, would he giving to the language used in conferring the power, and declaring the purpose for which it was to he exercised, a meaning not warranted by any sound rule ■of construction. We come, then, to the confirmatory mortgage, executed by two of the appellants, after their arrival at age. It was competent, no doubt, for them to confirm and make ¹⁵⁴ valid the mortgage made by their father as trustee, but every act of confirmation implies necessarily knowledge of the defect in the thing to be confirmed, and of the right to ratify or reject it. To make the confirmatory mortgage now relied on, as binding on the appellants, it must appear that they acted advisedly, with their eyes open, with information in regard to every material circumstance surrounding the transaction, with knowledge that the mortgage by the trustee was not made in pursuance of the power conferred by the will, and was.not, therefore, binding-on them, and that the money borrowed was expended by him for his own personal use, and not for the benefit of the trust estate.

If their right to impeach the mortgage was concealed from them, or they acted through misrepresentations made to them, then their confirmation amounts to nothing. Such is the law in regard to confirmation and ratification. Hoffman Steam Coal Co. vs. Cumberland Coal and Iron Co., 16 Md., 456 ; Cumberland Coal and Iron Co., vs. Sherman, 20 Md., 117 ; Morse vs. Royal, 12 Ves. Jr., 354; Smith vs. Kay, 7 H. L., 750.

Now what are the circumstances under which this confirmatory mortgage was executed? The trustee who was the father of the appellants except Wilson, died before the maturity of the mortgage, leaving four children, the cestuis que trust, under the will. Within two months after his death the mortgage is prepared by the appellee, reciting upon its face that the trustee’s mortgage was made in pursuance of the power conferred by the will, and for the purpose in part of changing the investment, and for the benefit of the cestuis que trust. Thus prepared, and with these recitals, it is